Despite the existence of an extensive system of
public planning controls, restrictive covenants still provide an important
mechanism by which landowners can control the use to which their neighbours put
their land. This means that, even where planning permission has been given for
a particular operation, a neighbour still may be able to prevent it if the
activity falls foul of a restrictive covenant.
In such circumstances, under the jurisdiction
conferred by section 84 of the Law of Property Act 1925, it is possible for an
application to be made to the Lands Tribunal, for the discharge or modification
of the covenant in question. In two recent decisions the tribunal has
considered issues of some general interest.
In In University of Westminster’s Application [1997] 22 EG 147 the
tribunal had to consider the nature and extent of its discretion under section
84 in cases where the application is unopposed. The University of Westminster
had made an application in respect of land and buildings fronting Marylebone
Road which were subject to restrictive covenants, imposed in 1966, limiting its
use to ‘a School of Management Studies, a College of Architecture and Advanced
Building Technology, a Hall of Residence for students and office for a District
Surveyor and for housing purposes’. The university applied for an order under
which these restrictions were to be either wholly discharged or modified so as
to allow use ‘for general educational purposes and a hall of residence for
students and for housing purposes’.
As is usual, notice of this application was
served on the original covenantees and all those listed by the applicant as
those who might have the benefit of the restrictive covenants. Only one
objection was made and this was later withdrawn. As a result, the application
came before the tribunal to consider whether an order should be made without a
hearing. Judge Marder QC issued a draft order that the covenants be modified in
the way sought by the applicant.
The University’s solicitors indicated that it
would be preferable for the covenants to be wholly discharged rather than
modified, but the tribunal was not prepared to exercise its discretion in this
way on the basis that a complete discharge would mean that adjoining owners who
might have the benefit of the restrictions would lose control over the future
use of the premises. As a result, it was agreed that an oral hearing should be
held on this question.
At the hearing, the applicant argued that its
application had clearly been primarily for the complete discharge of the
restrictions and that the plea for a modification had been in the alternative.
There had been no objectors and, while the tribunal had a discretion whether to
grant relief and, if so, the form of that relief, that discretion had to be
exercised on the basis of the evidence before it. There was no evidence on
which the primary relief sought by the applicant could be refused.
Judge Marder remained unpersuaded. It is well
established that the tribunal has a complete discretion as to relief and he was
satisfied that this discretion is not limited or abrogated by the fact that an
application is unopposed. The discretion had to be exercised judicially on the
evidence before the tribunal. The documents showed that the notice of
application had indicated to those on whom it had been served that the
university proposed to continue using the land for educational purposes.
Although the notice did show that an application
was also being made for a complete discharge, this was no more than a bare
reference, and objections might have been forthcoming had there been a clearer
indication that the removal of all restrictions was being sought. Accordingly,
he maintained the view that those who might be entitled to the benefit should
not be deprived of their control over future changes of use.
The second case, Re Willis’ Application [1997] 28 EG 137, was
one in which the primary objector to the modification of a restrictive covenant
was the local district council. The applicant had purchased the subject
property from the council under the right to buy scheme. The conveyance had
included a restriction under which the premises were required to be used as a
single private dwelling-house and could not be used for the carrying on of
trade or business.
In 1993 the applicant had started using the
house as a bed and breakfast establishment, having been told by the council
that this would not require planning permission. She was later informed that
this advice had been incorrect and she then duly applied for and obtained the
necessary planning consent. It was only at this point that she was reminded of
the restrictive covenant, whereupon she applied to the council to have the
restriction lifted. Despite a recommendation to the contrary from the chief
housing officer, the housing committee refused to do so.
The applicant duly applied to the Lands Tribunal
under section 84(1)(aa); and the council and one neighbouring owner
objected. After carefully considering all the evidence and the submissions, Mr
PH Clarke was satisfied that the covenant did impede a reasonable use of the
land and that the restriction did not secure practical benefits of substantial
value.
However, in order for the applicant to succeed,
it was still necessary to establish that money would be adequate compensation
for any loss or disadvantage suffered in consequence of the discharge or
modification. The problem posed was that the council was objecting not only as
owner of some of the properties on the estate on which Mrs Willis’ house was
located, but also as custodian of the public interest, as a result of its
powers and duties to enforce restrictive covenants under section 609 of the
Housing Act 1985.
A previous Court of Appeal decision, Re
Martins’ Application [1989] 1 EGLR 193, had suggested that, in such cases,
money can never be adequate compensation and that an application must fail.
However, as Mr Clarke pointed out, section 84 clearly envisages that the
discharge or modification of a restriction can occur without the payment of
compensation where no loss or disadvantage occurs.
While satisfied that Re Martin effectively
precludes the granting of an application in cases where a custodian of the
public interest would suffer loss or disadvantage, he did not think this was so
in cases like the present, where the evidence showed that this would not occur.
Accordingly, the applicant had made out her case and he was prepared to grant
the requested modification.
